Strong evidence suggests that liability to schizophrenia is highly heritable. At the same time only a portion of the individuals with a genetic liability develop schizophrenia, which increases the difficulty of isolating relevant genes. The studies proposed in this application apply the tools and constructs of cognitive neuroscience to test the hypothesis that a specific impairment in context processing, a cognitive function related to the control of attention and working memory and associated with the function of dorsolateral prefrontal cortex (DLPFC), may reflect a valid and reliable endophenotype for genetic liability to schizophrenia. First, we will develop a second generation of context processing measures that is both sensitive to the subtle impairments in the healthy relatives of schizophrenia patients, while at the same time interpretable as a specific deficit associated with context processing. Second, the study will test the specificity of context processing impairments to schizophrenia and schizoaffective disorder by comparing schizophrenia and schizoaffective (bipolar type) patients with bipolar patients and controls. Finally, we will study brain activity associated with context processing impairments in the relatives of schizophrenia patients using IMRI. Previous work has found that context processing impairments in schizophrenia patients have been associated with DLPFC dysfunction. We hypothesize that a DLPFC dysfunction associated with specific impairments in context processing will be evident in patients' unaffected relatives. The work proposed in this application has the potential to have important implications for developing behavioral genetic tools to isolate the genes that cause schizophrenia.